CNA - CYPRUS/Nicosia
Minister of Finance Harris Georgiades will present the ESTIA scheme to the parliamentary committee of Finance.
The committee discussed two bills tabled by Alliance of Citizens and ELAM for tax breaks aiming to reward consistent borrowers. A Finance Ministry official disagreed with the proposed bills. The Committee will discuss the two bills next week in the presence of Georgiades will also present the ESTIA scheme.

The ESTIA scheme aims to subsidise a repayment plans for household non-performing loans which are collateralised with residence as collateral. The scheme’s eligibility criteria were criticized by both the EU and the IMF as promoting moral hazard. Criteria include that eligible loans should be secured by primary residence with a value of €350,000, total household income should not exceed €50,000 whereas household net worth, excluding primary residence should not exceed 125% of the residence’s value.

Financial Commissioner Pavlos Ioannou said the bills should be put on hold until the finalised version of Estia which could be adjusted to these proposed bills.

What create problems with Estia are the income criteria he said won how is it possible one with a property of half a million to receive a subsidy from the state while a pensioner which is totally consistent with his payments and an income of €25,000 or €30,000 remains outside (the scheme)?”

“This is absolutely irrational and needs correction and this correction should come with the finalised version of Estia” he said, adding that this discussion justifies the view of the IMF over moral hazard.

He also questioned whether the EU Directorate General on Competition would approve the current version of the scheme.